Goods returned to the supplier is recorded in the accounts as: debit

Assessment: WAEC SSCE - Financial Accounting - 2021 (Objective) Subject: Financial Accounting

Question 1 Report

Goods returned to the supplier is recorded in the accounts as: debit

Answer Details
The correct entry for goods returned to the supplier is: Supplier's Account; credit Purchases Returns Account. In simple terms, when goods are returned to a supplier, it means that the supplier is taking back the goods that were previously sold to you and credited your account for the same amount. So, in your books, you need to record the credit received from the supplier by decreasing the amount you owe them (Supplier's Account) and increasing the account that keeps track of the returned goods (Purchases Returns Account). This results in a double-entry of Supplier's Account being debited and Purchases Returns Account being credited, effectively keeping the books balanced.
Read lesson note on Nature And Significance Of Accounting (JAMB)
Read lesson note on Principles Of Double Entry (JAMB)
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